A service business can be profitable on paper and still struggle to pay salaries on time. The work was done and invoiced, but the money has not arrived. Profit tells you whether the work is worth doing; cash tells you whether the company can keep going while it waits.
The free PLYNT business scan asks three questions in its Cash category: how many days pass on average between sending an invoice and getting paid, what share of revenue is currently overdue, and whether you take deposits or prepayment before work starts. Overdue revenue carries the most weight. In the scan’s bands, payment within 15 days is the lowest-risk answer and more than 60 days the highest.
Why 13 weeks
Thirteen weeks is one quarter, seen week by week. It is long enough to see a problem coming, such as a large payment falling in the same week as a slow client, and short enough to plan with real invoices and real bills rather than guesses.
Building the view
- Start with today’s bank balance. Use the money that is actually available, not the balance after invoices you expect.
- List expected receipts by week. Take every open invoice and place it in the week you realistically expect payment, not the due date. If a client usually pays 20 days late, plan for that.
- Add invoices you will send. Retainers, milestones and work that will be finished in the period, again placed on realistic payment weeks.
- List planned payments by week. Salaries, rent, taxes, suppliers, freelancers and software. Put each in the week it leaves the account.
- Calculate each week. Opening balance plus receipts minus payments gives the closing balance, which becomes the next week’s opening balance.
- Update it every week. Replace expectations with what actually happened and roll the view one week forward.
The week with the lowest closing balance is the one to act on now, while there is still time.
Shortening the wait
- Invoice on time. An invoice sent two weeks after the work is finished adds two weeks to every payment.
- Take a deposit. A prepayment before work starts reduces the amount at risk and signals commitment on both sides.
- Bill by milestone. Long projects paid only at the end put the whole cost on your balance sheet until the last day.
- Follow up on a schedule. A reminder a few days before the due date, on the day and a week after is routine, not confrontation.
- Compare real collection time with your terms. If terms say 14 days and clients pay in 45, either the terms or the follow-up needs to change.
What the view does not replace
A 13-week view is an operational tool. It does not replace your accountant, statutory reporting or tax planning, and it is only as good as the invoices and bills you put into it. Confirm important decisions against your accounting records.
How PLYNT supports this
PLYNT keeps invoices, recurring invoices, payments, expenses and receivables with the client and project they belong to, and its cash flow overview brings expected receipts and planned payments for the next 13 weeks into one view on every plan. Read more about finance and costs.
To see how your cash position scores, take the free business scan.